AMD Stock Analysis, Valuation (NASDAQ:AMD)

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$11.72 $0.3 (2.5%) AMD stock closing price Feb 21, 2018 (Closing)
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AMD
Updated on : Feb 21, 2018
previous close
AMD 11.7 (0%)
NASDAQ 7218.2 (0%)
Closing Price On: Feb 21, 2018
stock rating
RATING: ★★★★★★★★★★ (0/5)
Industry :
Electronics-Semiconductors
Sector :
Computer and Technology
5 Quarter Revenue
Revenue Growth
2017-Q4
$billion
%
YOY GROWTH
Compared to the industry
Long Term Growth
5 Year CAGR:
-0.3%
Operating Profit
Operating Margin:
3.8%
Sector Average:
5.3%
5 Quarter Net Profit
Net Margins
2017-Q4
%
LTM Margin
Compared to the industry
Debt/Equity Ratio
Debt:
1.4B
Debt/Equity Ratio:
 2.28
Compared to the industry
Cash Flow
Operating cash flow:
$383M
Net Income:
$61M
PROS      CONS
Recent Growth
Cash Flow
ROIC
ROE
FCF Margin
PS Valuation
Long Term Growth
Net Margins
High Debt Burden
PE Valuation
Rating: ★★★★★★★★★★ (0/5)
Relative Valuation
AMD PS :
2.1
Industry PS :
2.8
Sector:   Computer and Technology.   *PE adjusted for one time items.
Other Metrics
Return on Invested Capital:
15%
Return on Equity:
9.1%
Free Cash Flow Margin:
22.9%
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AMD Stock Analysis

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AMD’s stock performance since the listing in the 1970’s can only be termed as erratic. It has been unpredictable in terms of top line growth, with swings in market share and growth coming in spurts and then crashing. AMD revenue showed signs of improvements in 2016, with steady growth for two quarters in a row. The company’s new range of chips also generated some excitement during that year. It remains to be seen if AMD continues this streak in the coming years.

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Note: Amigobulls stock rating is our opinion based on the historical performance of the company's fundamentals. It is not indicative of the future performance of the stock.

Advanced Micro Devices, Inc. Stock Rating 2.8/5

Should you buy AMD stock?

  • AMD sales grew by 33.8% year on year in 2017 Q4.
  • The company has an operating cash flow which is 6.3 times the net income.
  • AMD stock is trading at a favorable price to sales multiple of 2.1 as against the Electronics-Semiconductors industry average multiple of 2.8.
  • AMD generates a high return on invested capital of 15%.
  • The LTM ROE of 9.1% for AMD is attractive.
  • The company has a healthy free cash flow margin of 22.9%.

Should you sell AMD stock?

  • Sales declined by -0.3% annually over the last 5 years.
  • AMD's Net margins were poor at 0.8% in the last twelve months.
  • With a debt/equity ratio of  2.28, AMD is highly leveraged in comparison to Computer and Technology peers.
  • The AMD stock currently trades at a PE of 195.3, which is expensive, compared to the industry average of 25.3.

Comments on this video and AMD stock

AMD stock analysis must include the growth potential of the semiconductor market. However, in case of AMD, since the company doesn’t really have a major dominance in terms of market share, that aspect may become less important. For instance, in the GPU graphics cards market, for Add-In-Boards (AIBs), which use discrete graphics cards, AMD has a small share of the market, whereas NVIDIA accounts for nearly all of the rest. So, in that sense, AMD doesn’t have much of a moat, so to say, as things stand. AMD analysis shows that the firm has been rather unstable in the past. AMD stock price analysis shows the ups and downs faced by the tech company, especially around year 2000, around the time of the dotcom bust. A look at the market in which AMD operates, shows that the company faces significant pressures from peers like Intel and NVIDIA, among many others.

AMD PE ratio chart is of lesser relevance now because AMD has been recording losses, but if the company does recover, then it can be a handle tool, which prospective investors can use while evaluating the company. AMD price history shows an unstable growth pattern since listing. A serious turnaround could make the stock a more luring target for tech investors.